Asian markets delivered a fragmented performance on Thursday, caught between the tailwinds of a softer U.S. Federal Reserve stance and the headwinds unleashed by Oracle’s underwhelming quarterly results. While Wall Street flirted once again with record highs, Asia’s technology-heavy indices absorbed the brunt of renewed concerns surrounding the sustainability of AI capital expenditures.

AI Anxiety Returns as Oracle Misses Forecasts

Oracle’s weaker-than-expected earnings triggered an 11.5% drop in its shares during after-hours trading, setting off a ripple effect through Asian technology sectors. As one of the clearest proxies for corporate AI investment, Oracle’s results revived questions about the industry’s ability to convert massive capital spending — much of it debt-financed — into predictable revenues.

Market strategist Ipek Ozkardeskaya noted that the report “confirmed concerns around heavy AI spending, financed by debt, with an unknown timeline for revenue generation.” That uncertainty contributed to outsized declines in names with AI exposure, most notably SoftBank Group, which fell 7.7% and dragged Tokyo’s Nikkei 225 down 0.9% to 50,148.82.

The episode marks a shift in market psychology: after a year of AI-driven euphoria, investors appear increasingly inclined to scrutinize balance sheets rather than buy into growth narratives alone.

Monetary Divergence Shapes Regional Behavior

The broader macro backdrop provided a counterweight to the negative tech sentiment. The Fed executed its anticipated rate cut while signaling openness to further easing in 2026. Powell stressed that interest rates may now be positioned neutrally — neither stimulating nor restricting the economy — allowing the central bank time to reassess inflation and labor trends.

Yet this dovish backdrop did little to fully steady Asian markets. Expectations that the Bank of Japan may raise interest rates next week pressured Japanese equities, while Hong Kong’s Hang Seng slipped 0.1% even as the local monetary authority cut borrowing costs to their lowest level since 2022.

China’s Shanghai Composite fell 0.7% ahead of November credit data expected to highlight weakening domestic demand. With new yuan loans collapsing in October, investors await signals on whether Beijing will lean toward additional liquidity support.

Regional Performers Offer a Mixed Picture

Elsewhere in the region, Australia’s S&P/ASX 200 gained 0.2%, supported by strength in gold and mining stocks as unemployment held steady at 4.3%. South Korea’s Kospi fell 0.6%, pressured by a 3.8% slide in SK Hynix after the local exchange warned about its rapid ascent this year. Taiwan’s Taiex dropped 1.3%, while India’s Sensex advanced 0.4%.

Wall Street’s resilient close — with the S&P 500 nearing its all-time high and the Dow climbing 1% — underscored strong appetite for lower rates. But the disconnect between buoyant U.S. equity sentiment and faltering Asian tech shares highlights a growing divergence tied to AI’s maturing cycle.

What to Watch Next

Markets now turn to China’s credit data, the BOJ policy meeting, and signals from U.S. corporate earnings on whether AI demand is stabilizing or entering a recalibration phase. As valuation sensitivity grows and interest-rate expectations shift, Asia’s technology benchmarks may continue to reflect a more cautious investor psychology in early 2026.